The sorting signal motif for targeting pro-opiomelanocortin (POMC, pro- ACTH/endorphin) to the regulated secretory pathway has been identified as a 13 amino acid amphipathic loop located at the N-terminus of POMC. An amphipathic loop sorting signal has also been identified for pro- enkephalin, indicating the generality of these motifs as sorting signals for the regulated secretory pathway. Recently, a sorting receptor has been identified in bovine pituitary Golgi and secretory granule membranes. It is a ~47 kD protein and is highly specific for the N-POMC sorting signal. The POMC sorting signal bound to this receptor optimally at pH 5.5-6.5, consistent with the pH of the trans Golgi network where sorting begins. Our findings support a receptor-mediated mechanism for sorting prohormones to the regulated secretory pathway. A novel class of prohormone processing aspartic proteases was studied. One of these, yeast aspartic protease 3 (YAP3), has been purified and shown to cleave prohormones at a pair of basic residues; and a pair or mono-basic residue with an additional basic residue upstream or downstream from the cleavage site. The Km and kcat of YAP3 for various prohormone substrates showed that the catalytic efficiency was enhanced by increasing the number of basic residues flanking the cleavage site. The specificity and pH optimum of YAP3 were similar to the approximately 70 kD mammalian aspartic protease, pro-opiomelanocortin converting enzyme (PCE). YAP3 antibody cross-reacted with PCE on Western blots, suggesting that YAP3 and PCE are homologues. Western blot analysis showed the presence of two YAP3-like proteins, approximately 70 kD and approximately 90 kD in mouse brain and pituitary. Immunocytochemistry using anti-YAP3 in combination with in situ hybridization for neuropeptide cDNAs revealed colocalization of YAP3-like immunoreactivity with CCK mRNA in hippocampal neurons and vasopressin mRNA in supraoptic nucleus neurons. Thus YAP3-related processing enzymes likely play a role in pro-hormone processing in the CNS. YAP3-related cDNA clones from a mouse brain library are currently being analyzed.